JCR-VIS Reaffirms Entity Ratings of Security Papers Limited

Karachi, October 28, 2014 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Security Papers Ltd. (SPL) at ‘AAA/A-1+’ (Triple A/A-One Plus). Outlook on the medium to long term rating is ‘Stable’. The previous rating action was announced on July 25, 2013.

The assigned ratings incorporate SPL’s positioning as a strategically significant entity in its role as the sole bank note paper manufacturer in the country. The primary buyer of SPL’s products, Pakistan Security Printing Corporation (Pvt.) Ltd (PSPC), is also its single largest shareholder, having a 40% stake in the company. According to a memorandum of understanding between the two companies, PSPC will only purchase bank note paper from SPL, effectively eliminating off-take risk for SPL’s major output.

The ratings also draw strength from the stable financial risk profile of SPL whereby debt leverage is low and ability to service debt obligations is strong. Moreover improvement in production process is evident from a declining trend in production and finishing losses on a timeline basis.

Under the directives of the Board of Directors, SPL is also pursuing phase wise capacity expansion for which up-gradation of plant and addition of new equipment is on-going. Subsequent to the completion of plant up gradation, total installed capacity is expected to be enhanced to 3,000 tons from 2,500 tons currently.

Production of bank note paper continues to be the major revenue source of SPL; however, contribution of other products has increased over time. Moreover, the company’s investment portfolio also provides meaningful contribution to the bottom line. Investment income almost entirely emanates from stable sources.

For more information, contact:
Ms. Sobia Maqbool
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

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